Two LLCs. Three trusts. One compound.
The structure is designed for three things: clean liability separation between the dirt and the businesses, seamless inheritance to Kyle and Kona with zero probate, and a clear legal place for Susan to live without entangling ownership.
Entity map
- Land · barndo · ADUs
- Well · septic · drives
- Common spaces & infra
- Series A — Bakery Cart
- Series B — 3D Printing
- Series C — Media Production
- Series D — Disc Golf
- Series E — Reserve / Future
Here is the simple version. We are buying land near Belton, Texas and building a place for the whole family.
To keep things organized and protected, we use three legal tools. First, a company called an LLC owns the land and buildings. Second, a different LLC runs all the small businesses we want to start. Third, each family group puts their share inside a trust — think of it like a labeled box with their name on it.
When Mom and Dad pass away, the things inside their box go straight to Kyle and Kona. No court, no waiting, no taxes.
Grandma Susan lives in one of the houses, but she rents from us. She does not own any of it.
The land entity.
A Texas LLC formed under Tex. Bus. Org. Code Ch. 101 takes title to the land, the barndo, the ADUs, and all infrastructure. Jeff serves as initial Manager; succession is written into the Operating Agreement.
Governance basics
- Three Class A voting units at 33.33% each (J&D, K&C, Kyle).
- Future spouses are admitted only by unanimous consent; otherwise they're economic-only assignees, not voting members.
- Major decisions (sale, encumbrance over $50K, new member, dissolution) require unanimous consent. Routine items are majority.
- Buy-Sell triggers: death, disability, divorce, voluntary exit, bankruptcy. Formula price = appraised FMV minus debt, paid over 60 months at AFR.
- Right of first refusal — any unit attempting to transfer must offer to the other two first.
Why an LLC instead of joint title
Joint tenancy is simple but loses the liability shield, complicates running businesses on the dirt, and creates an inheritance mess the first time a spouse predeceases. An LLC gives you Texas charging-order protection, a single deed transfer at closing, and a written rulebook for the disputes that will eventually come up.
Manager-managed Texas LLC, three equal Class A voting units, restrictive transfer provisions, unanimous consent for major decisions.
An LLC is a kind of company. We are starting one to own the land, the barndo (main house), the smaller houses (ADUs), and everything outside — like the disc golf course, the driveway, and the well.
Why a company? It is a wall of protection. If someone gets hurt on the disc golf course and sues, they can only go after the disc golf business. They cannot reach the land or the houses.
The LLC has three equal owners: Mom and Dad together, Kona and Colten together, and Kyle by himself. Big decisions — like selling the land — need everyone to agree. Smaller everyday things just need two out of three.
Seamless transfer to Kyle & Kona.
Each family unit creates a Texas revocable living trust. The trust — not the individuals — is admitted as the Member of both LLCs. On Jeff & Denise's death the trust becomes irrevocable and routes the membership interest to Kyle and Kona. No probate. No court.
Why this costs nothing at death
- Texas inheritance tax: $0. Repealed in 2015.
- Texas estate tax: $0. None exists.
- Federal estate tax exemption: ~$13.99M per person (2025). You are roughly ten times under the threshold.
- Texas has no state income tax — distributions from the LLCs flow through cleanly.
Why not an LLC transfer-on-death clause
Texas doesn't have a statutory TOD designation for LLC membership interests. Operating-agreement death clauses can be challenged by creditors or surviving spouses and don't help in a common-accident scenario. The revocable trust is the cleanest, most-respected vehicle for this exact purpose.
Drafting checklist for the attorney
- Spendthrift provisions to protect Kyle/Kona's eventual inheritance from their own creditors and divorces.
- Successor trustees named in clear order (likely Kona → Kyle → corporate backup).
- Pour-over wills as the safety net for anything not titled in the trust.
- HIPAA, medical POA, financial POA executed alongside.
- Texas TOD Deed (Tex. Est. Code Ch. 114) as a backup for any real property held individually outside the LLC.
The federal exemption is scheduled to drop to roughly $7M per person on Jan 1, 2026 unless Congress acts. Even at the reduced level, this project is well under the threshold — but the team should re-confirm at engagement.
This part is about what happens when Mom and Dad eventually pass away. Normally when someone dies, their stuff goes through a court process called probate. It can take months or even years before the family gets it. We want to skip that.
So we put Mom and Dad’s share inside a “revocable living trust.” Picture it as a box with a name on the lid. While they are alive, they control what goes in and out. When they both pass away, the box becomes locked, and Kyle and Kona inherit what is inside right away.
No court. No waiting. And no taxes — Texas does not have a death tax, and the federal one only kicks in if you have over $14 million per person. We are nowhere near that.
Tenant, not owner.
Susan is housed under a written residential lease from the Property LLC. She is not a member, manager, beneficiary, or guarantor. The lease — not familial sentiment — controls every aspect of her presence on the property.
Lease mechanics
- Term: 12 months, auto-renewing month-to-month, terminable by either side with 60 days written notice.
- Rent: nominal but real ($100–$500/mo). A $1 lease can be challenged as a sham.
- Premises: a specific ADU or designated unit. Common areas governed separately.
- Conduct clause: behavior expectations, guest stays under 14 days, no business operation from the premises without written consent.
- Termination on death: lease ends automatically; estate has 30 days to clear personal property.
- No assignment, no sublet under any circumstance.
- Explicit acknowledgment of no ownership, no inheritance right, no claim.
Why a lease and not a life estate
A life estate gives Susan a recognized property interest that clouds title, complicates refinance or sale, and can trigger Medicaid look-back issues if she needs long-term care. A lease keeps the LLC in complete control.
Grandma Susan is going to live in one of the smaller houses. But she will not own any of it. She will sign a lease — the same kind of rental agreement you sign for an apartment.
She pays a small monthly rent, somewhere between $100 and $500. The lease has rules: how long visitors can stay, no running a business out of the house without permission, and so on. The family can end the lease with 60 days notice. When Susan passes away, the lease ends automatically.
We chose a lease instead of giving her a “right to live there for life” because a lease keeps things flexible. If she ever needs full-time care, or if we ever need to sell, the lease does not get in the way.
One Series LLC. Many ventures.
Texas is one of the friendliest states for the Series LLC (Tex. Bus. Org. Code §101.601+). A single parent entity files one Certificate of Formation, one annual franchise tax, and creates internal protected series — each with its own assets, members, and liability shield.
Recommended series
| Series | Business | Notes |
|---|---|---|
| A | Bakery Cart | Denise & Kona-led. Cottage-food rules (Tex. H&S §437) for low-risk items. |
| B | 3D Printing | Kyle-led. Asset-heavy; separate liability shield matters. |
| C | Media Production | Jeff-led. Higher contract exposure; iron-clad MSAs. |
| D | Disc Golf | Premises liability — primary reason to wall off from property entity. |
| E | Reserve / Holding | Placeholder for the next idea or shared equipment. |
Critical maintenance rules
- Separate bank account per active series — non-negotiable.
- Separate QuickBooks class or file per series.
- Contracts signed in the series' full legal name, never the parent or another series.
- Each operating series carries its own general liability policy.
- Inter-series transactions documented in writing (e.g., Series D rents the course from the Property LLC).
Operating series pay rent to the Property LLC under simple commercial leases. That paper trail is what keeps the liability wall standing in court — and creates a deductible expense for the operating business.
We are going to run several small businesses on the property: a bakery cart, a 3D printing shop, media production, a disc golf course, and probably more later.
Each business has different risks. If a customer slips at the bakery, we do not want them to be able to grab the 3D printer in a lawsuit. So we use a special Texas setup called a “Series LLC.” Each business sits inside its own protected pocket. Lawsuits stay in the pocket where they started.
The catch is that each business has to keep its own bank account and use its full legal name on every contract. If we mix things up, the protection disappears. Each business also pays rent to the Property LLC for the space it uses — that keeps a clean paper trail.
How each unit gets to its 33%.
At a $750K–$1.25M budget split three ways, each unit's expected contribution is roughly $250K–$417K. That's a stretch for Kyle as a single adult, so the Operating Agreement should plan for it explicitly.
Contribution vehicles
- Cash contribution — straight into the LLC's account. Counts dollar-for-dollar.
- Sweat equity credit — labor on the build at a documented hourly rate ($35–$60/hr), capped at ~25% of any unit's contribution to avoid IRS recharacterization.
- Promissory note — short unit signs a recorded note at the AFR (currently ~4–5%), paid from distributions plus monthly minimum. Note survives death and is settled against the estate before inheritance.
- Annual gifting — J&D can gift $19K per donee per year (2025) without filing. Across Kyle, Kona, and their spouses, this knocks down promissory-note balances quickly.
VA & Texas Veteran Benefit Programs
Kyle is currently active duty Army with a planned honorable discharge in May 2027. That timing lines up almost exactly with the project's Phase 1 build window — meaning his contribution to the compound can be structured around several veteran-specific financing programs that aren't available to anyone else in the family.
Run by the Texas General Land Office — uniquely well-suited to a project like this because one of the programs is specifically a land loan. Honorably discharged Texas resident veterans qualify.
- VLB Land Loan — up to $150,000 for raw land, 30-year fixed term, below-market rate. The parcel must be at least one acre in Texas. Designed exactly for buys like the compound.
- VLB Housing Loan — up to ~$766,550 (matches conforming limits) for a primary residence. 0.50% rate discount for veterans with a VA disability rating.
- VLB Home Improvement Loan — up to $50,000 for building or improving a primary residence. Could partially fund Kyle's eventual ADU.
The federal benefit. $0 down payment, no private mortgage insurance, no prepayment penalty, and usually a better rate than conventional. The funding fee (typically 2.15% on first use) can be rolled into the loan and is waived entirely for veterans with a service-connected disability rating.
Important wrinkle for this project: VA loans require the borrower to occupy the home as a primary residence within 60 days and aren't typically available for LLC-owned property. Workarounds exist (e.g., Kyle buys his portion individually and contributes to the LLC later) but those moves can trigger due-on-sale provisions on the mortgage. A VA-savvy lender needs to look at the LLC structure before this can be used cleanly.
The military's version of a 401(k) loan. Kyle can borrow up to 50% of his vested TSP balance or $50,000, whichever is less. Five years to repay (up to 15 if used for a primary residence), no tax and no penalty — he's just repaying himself with interest.
Texas grants a graduated homestead-tax exemption for veterans based on VA disability rating. A 100% disability rating means a total exemption on the veteran's homestead. If Kyle ends up with any rating post-discharge, this should be filed for immediately — it can meaningfully reduce his annual carrying cost on the compound.
- Now through May 2027 — Kyle is active duty. He can pull his VA Certificate of Eligibility today and obtain VA Home Loan pre-approval. The Servicemembers Civil Relief Act (SCRA) also caps any pre-service debt interest at 6% during this window.
- Before discharge — Kyle should establish or formalize Texas residency. VLB programs require it. Voter registration, driver's license, and a Texas address all count.
- May 2027 onward — Full lifetime access to VA Home Loan and VLB programs activates. Phase 1 of the build is approximately wrapping up at this point, so timing the actual property transactions to coincide with discharge gives Kyle maximum benefit.
- Find the right lender — connect with a Texas lender who specializes in both VA loans and VLB programs. Bell County community banks and Austin-area credit unions (Greater Texas FCU, RBFCU, Velocity Credit Union) often have dedicated VLB officers who can model how Kyle's stacked benefits close his funding gap.
Future capital calls
Capital calls for Phase-2 ADUs or infrastructure are approved by majority vote. A unit that doesn't fund its share is diluted pro-rata at fair market value — no punitive ratchets. This is family, not a startup.
Tapping Roth IRA, 401(k) & Investments
Funding your $250K–$417K share doesn't have to come entirely from cash on hand. Each tax-advantaged account has its own rules, costs, and traps. The basics are below — coordinate any actual move with the CPA before pulling the trigger.
Roth IRA. Your direct contributions (the dollars you put in over the years) can be withdrawn at any age, tax-free and penalty-free, because you've already paid income tax on them. Earnings withdrawn before age 59½ generally trigger a 10% IRS penalty plus ordinary income tax, unless an exception applies. After 59½ and a five-year account age, the entire account comes out tax-free and penalty-free. The first-time-homebuyer exception lets each spouse withdraw up to $10K of earnings penalty-free for a primary residence — likely applicable to Kyle if he's been renting; rarely useful for J&D.
Traditional 401(k) and Traditional IRA. Early withdrawal before 59½ is the most expensive option: 10% IRS penalty plus ordinary income tax on the full distribution. After 59½, the penalty disappears but income tax still applies. A 401(k) loan (if your plan allows) lets you borrow up to 50% of your vested balance or $50,000 — whichever is less — repaid to yourself with interest over five years (or up to fifteen years if the funds purchase a primary residence). No tax and no penalty on a loan, but if you leave the job the balance often becomes due immediately. The Rule of 55 waives the 10% penalty if you separate from your employer in the year you turn 55 or later, applied to that employer's 401(k). The $10K first-time-homebuyer exception also waives the penalty (not the income tax) on Traditional IRAs.
Taxable brokerage accounts. The most flexible source — no age restriction and no early-withdrawal penalty. Long-term capital gains on assets held more than 12 months are taxed at 0%, 15%, or 20% based on income; in 2025 a married couple filing jointly with taxable income under $94,050 pays 0% on long-term gains. Short-term gains (≤ 12 months) are taxed at ordinary income rates. Tax-loss harvesting within the same year can offset gains. For most families with regular brokerage holdings, this is the cleanest source after cash.
Home equity / HELOC. An option if your current residence has meaningful equity. Interest may be deductible when proceeds are used to "buy, build, or substantially improve" a home (TCJA rules). Variable rates introduce risk; weigh against locking in current mortgage costs.
1) Cash on hand. 2) Taxable brokerage, especially if you sit in the 0% LTCG bracket. 3) Roth IRA contributions only. 4) HELOC if rates are reasonable. 5) 401(k) loan. 6) IRA or Roth earnings with a qualifying exception. 7) Last resort: 401(k) early withdrawal with full penalty plus tax.
Bottom line. Pulling from tax-advantaged accounts costs you both today's tax bill and decades of compound growth. Run the math with the CPA before tapping anything beyond Roth contributions and taxable brokerage.
Building this is going to cost between $750,000 and $1.25 million total. That covers the land, the main barndo, one ADU, plus the basics like a well, a septic tank, the driveway, electricity, internet, and propane.
Split three ways, each family group’s share is about $250,000 to $417,000. That is a stretch for Kyle as a single adult.
He has options. He can pay cash. He can work on the build and get credit for his labor (up to about a quarter of his share). Or he can sign an IOU to the LLC for the part he cannot cover, with normal interest, paid back over time from his share of the profits.
Mom and Dad can also gift Kyle up to about $19,000 a year tax-free, which helps pay down the IOU faster.
What Bell County will actually require.
Zoning & land use
Bell County has no countywide zoning ordinance — agricultural, residential, and home-occupation mixes coexist without rezoning. The real constraints are deed restrictions and HOA covenants on the specific parcel. Stay outside Belton, Temple, Salado, and Killeen ETJs to keep maximum flexibility for the bakery, disc golf, and shop.
Utilities
- Water: well likely required. $12K–$25K for a 200–400 ft well. Test for hardness and sulfates.
- Septic: Bell County Public Health District OSSF permit. Conventional $7K–$12K; aerobic $12K–$20K.
- Electric: Hamilton EC, Bartlett EC, or Oncor depending on parcel. Remote service drop can run $5K–$30K — get a quote pre-close.
- Internet: Spectrum/AT&T fiber is spotty rurally. Starlink works well for media uploads.
- Propane: dual 500-gal tanks for redundancy.
Barndo permitting
Bell County is barndo-friendly. Outside city ETJ there's typically no building permit, but OSSF, electrical inspection, and any commercial portion (commissary kitchen, public-facing media studio) trigger separate review.
Property tax & exemptions
- Effective rate runs roughly 1.6%–2.1%. On a $1M property, $16K–$21K/yr.
- Homestead exemption: J&D's primary residence claim saves ~$1,500–$2,500/yr.
- Ag exemption (1-d-1): disc golf course, hay, beehives, or grazing on unused acreage can drop taxable value 90%+ on that acreage. Talk to Bell CAD early.
- Wildlife management valuation: the modern alternative for recreation-focused property.
Insurance stack
- Property LLC: landlord/commercial property policy.
- Each operating series: commercial general liability sized to its risk.
- Disc golf series: premises liability + a participant waiver program.
- $2M–$5M umbrella over everything — $400–$900/yr.
- Wind/hail rider required. Hail is the dominant claim driver in Central TX.
Bell County is a good fit because the county itself has no zoning rules. That means we can run businesses on residential land without asking for special permission. We just have to check that the specific piece of land we buy does not have private restrictions (sometimes called deed restrictions or HOA rules) that would block what we want to do.
We will probably need to dig a well for water (about $12,000 to $25,000) and put in a septic tank for sewage (about $7,000 to $20,000). Electricity comes from a rural co-op. Internet is sketchy out there, but Starlink works well at about $120 a month.
Property tax in Texas is steep — about $16,000 to $21,000 a year on a million-dollar property. But if part of the land is used for agriculture, bees, or even the disc golf course, we can apply for a special tax break that cuts the bill on that part of the land by 90% or more. We should look into that early.
How this rolls out.
Phase 0 — Pre-close (months 0–3)
- Engage Texas estate attorney to draft three trusts + ancillary docs.
- Engage Texas business attorney for both LLCs and operating agreements.
- Engage CPA familiar with Series LLCs and trust accounting.
- Identify parcels via Bell CAD, county GIS, and raw-land agents.
- Soil/perc test, well check, easement and title review on shortlist.
Phase 1 — Build (months 3–18)
- Close on land in the Property LLC's name.
- Site work: drive, well, septic, electric drop, propane.
- Main barndo: ~2,500–3,000 sqft including shared kitchen/common areas.
- First ADU (Susan's) in parallel or immediately after.
- Form Series LLC; open per-series accounts and books.
Phase 2 — Operate & expand (months 12+)
- Launch bakery (lowest capital to start).
- Launch media and 3D printing as space and demand allow.
- Disc golf course design ($2K–$5K), tee pads, baskets. Public via Series D once insurance is bound.
- Second ADU (Kyle's) on phased timeline.
This happens in three stages.
Stage one (first three months): hire the team. That means a lawyer, an accountant, and a real estate agent who knows raw land. Find the right piece of land. Test the soil to make sure a septic system will work. Make sure the title is clean.
Stage two (months three through eighteen): buy the land. Build the main barndo, around 2,500 to 3,000 square feet. Build Susan’s ADU at the same time or right after. Set up all the legal entities and bank accounts.
Stage three (month twelve and beyond): launch the bakery first because it is the cheapest business to start. Then media and 3D printing. Then the disc golf course once we have the right insurance. Build Kyle’s ADU when we can afford it.
Things to settle before the attorney call.
- Final budget envelope and per-unit contribution schedule, including Kyle's deficit plan.
- Distribution policy — pro-rata after a reserve, or held in the LLC for reinvestment by default.
- Series ownership: 1/3 each (mirroring property) or only the family members running each business.
- Dispute resolution: mediation → arbitration, plus an optional family ombudsman.
- Whether to layer an irrevocable life-insurance trust (ILIT) later to fund buyouts without forcing a sale at a death event.
Irrevocable Life Insurance Trust (ILIT)
An ILIT is a separate, irrevocable trust that owns a life-insurance policy on you. When you die, the death benefit pays into the trust — not into your estate — and flows to the beneficiaries (Kyle and Kona) income-tax-free and outside of probate. In the compound context, those proceeds give the surviving family units the cash to buy out your share at the formula price without ever needing to sell the land or rush a refinance. It is the financial pressure-release valve that protects the compound from a forced sale at the worst possible moment.
- Death benefit pays out income-tax-free and outside probate — money is available within weeks, not months.
- Removes the policy proceeds from your taxable estate (matters if the federal exemption drops in 2026).
- Provides liquidity exactly when needed — no fire sale of land or distressed refinance.
- Premiums can be funded with the annual $19K gift exclusion per beneficiary, often making the cost effectively tax-free.
- Asset-protected from your creditors during life and from beneficiaries' creditors after.
- Locks in current insurability — a policy in force is not affected by future health changes.
- Irrevocable — once funded, you generally cannot undo it, change beneficiaries freely, or pull the policy back.
- You cannot serve as trustee. Requires a third party — corporate trustee, attorney, or a non-beneficiary family member.
- Requires annual Crummey notices to beneficiaries to qualify the premium gifts for the annual exclusion. Skipping these can disqualify the trust.
- Three-year lookback: if you transfer an existing policy into the ILIT and die within three years, the IRS pulls it back into your estate.
- Setup cost (~$1,500–$3,500 in attorney fees) plus ongoing administration.
- Premiums are a real, recurring expense that must be sustainable for the life of the policy.
- Get insurance quotes on both of you for the buyout amount (~$500K–$1M each). Compare term (cheaper, expires) vs. permanent (more expensive, lasts).
- Discuss with the estate attorney whether the ILIT lives as a standalone trust or as a coordinated sub-trust under the master revocable trust structure.
- Identify a trustee — not a spouse or named beneficiary. Options: a non-beneficiary sibling, a corporate trustee (bank trust department), or your attorney's firm.
- Buy a new policy in the ILIT's name from day one rather than transferring an existing one — this avoids the three-year lookback entirely.
- Set an annual calendar cadence with the attorney for Crummey notices, premium gifting, and ILIT recordkeeping. This is where most ILITs fail in practice.
- Coordinate with the LLC Operating Agreement: explicitly state that ILIT proceeds fund the buy-sell trigger at death, and that surviving units must accept the proceeds as full payment for the deceased unit's interest.
Before we hire a lawyer, the family needs to agree on five things.
One: the exact dollar amount each family group will put in, and how Kyle handles his shortfall.
Two: when the businesses make money, does it get paid out to the three families right away, or does it sit in the LLC for the next project?
Three: should each business be one-third owned by every family (matching the property), or should only the family running that business own it?
Four: when we disagree about something, what is the rule for working it out? Usually it is mediation first, then arbitration. Some families also have a family ombudsman.
Five: should we get a special kind of life insurance trust so there is cash to buy out a share if someone passes away — instead of having to sell anything?
Who you'll need.
- Texas estate-planning attorney — look for State Bar Estate Planning & Probate certification.
- Texas business/transactional attorney experienced with Series LLCs (often same firm).
- Texas CPA with multi-entity and trust accounting experience.
- Bell County land agent who works raw land — not residential.
- Licensed Texas barndo contractor.
- Independent insurance broker who can build the multi-policy stack.
To pull this off, we will need to hire a small team of professionals.
A Texas estate-planning lawyer to set up the trusts and wills. A Texas business lawyer who has set up Series LLCs before — often the same firm handles both. A Texas accountant who knows how to do taxes for multiple businesses and trusts.
A real estate agent who works with raw land (it is a different skill than selling regular houses). A licensed Texas contractor who builds barndos. And an insurance broker who can put together all the different policies we need.